The state-run Korea Development Bank said Thursday that it had signed a conditional memorandum of understanding on Hyundai Heavy Industries’ acquisition of Daewoo Shipbuilding & Marine Engineering.
While KDB is also to check the intention of Samsung Heavy Industries, the third of South Korea’s so-called “Big Three,” the latest deal was seen as putting industry frontrunner HHI in a highly favorable position to take over the cash-strapped DSME and secure market monopoly.
“KDB has signed today a conditional MOU concerning the merger and acquisition between HHI and DSME,” said KDB Chairman Lee Dong-gull in a press conference.
The due negotiations had to be kept nondisclosed, due to the complicated structure of the deal, Lee added.
The state-run bank, which is the largest shareholder of DSME, will also inquire with Samsung Heavy about its purchasing intention.
“HHI became the first (of the two shipbuilders) to clinch an MOU but this does not mean that it is to have any special benefits during the selection process,” Lee underlined, denying speculation that HHI was the only bidder.
DSME has remained under the state-run bank’s control since 1999, when the former Daewoo Group disintegrated in the aftermath of the Asian Financial Crisis. Though rumors sporadically spread about its new ownership, few have set out over recent years to take over the reeling shipbuilder amid a prolonged industry slowdown.
Upon logging massive operating losses and a liquidity shortage in 2015, the shipbuilder kicked off a turnaround plan to improve its financial structure and normalize management.
As a result, the company saw its debt ratio drop below 300 percent from above 5,000 percent as of the third quarter last year. Its operating profits stood at 700 billion won ($629 million) in 2017 and is estimated to come around 1 trillion won for 2018.
“Based on such improvements, we have judged that it is now the right time to find a new private owner for DSME,” the KDB chief said. (end of excerpt)
Click here for the full story, on the Korean Herald website.
Click here for the related note by HHI (7 PDF pages), on its own website.